Stock Market reverse of Currency?

Hi all,

Is it true that if stock market go up, currency go down and

if stock market go down, currency go up?

can someone explain to me?

I don’t think anyone is sure what you mean by ‘currency’???

I can tell you this though:

‘Stock market up’ i.e. the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 ‘up’: pairs like GBP/JPY and EUR/JPY also ‘up’ and USD/??? pairs ‘down’ (except for USD/JPY) and visa versa. Note: this ‘holds true’ AT THE MOMENT i.e. there is a very strong correlation between those pairs and ‘the stock market’ AT THE MOMENT but it’s not necessarily going to ALWAYS be so.

There are other correlations as well e.g. Oil ‘up’: pairs like ???/TRY (Turkish Lira) and ???/NOK (Norwegian Krone) ‘up’. Gold ‘up’: pairs like ???/ZAR (South African Rand) and AUD/??? and NZD/??? ‘up’. These are commonly referred to as the ‘Commdolls’ (‘Commodity Dollars’).

All of this is covered in the babypips school I might add!!!

I THINK this may answer your question however.

Regards,

Dale. (forexbrokersonline.net).

Hi Dale,

thanks for your answer…you have fully answer my question

Dale I was posting on another thread about thanksgiving trading and how it will effect the marktes. I responded by saying things are slow however I keep hearing chatter about the december effect.
Brings me to my question…

If the December effect means stocks will be their highest all year, wether a rally in a bear or a bull market, will that mean then we can expect $ weakness and jpy strenth?

Anotherwords should I be short usdjpy (which I am) long eur/usd? or at very least should my biases reflect what you have said about this correlation?

Thanks, John

YOU are asking ME???

Now just hold on a sec!!!

If I had the experience or insight to answer THAT question I’d be a very happy man!!!

But if you want my ‘guesstimate’:

If stocks DO rise then pairs like GBP/JPY, EUR/JPY, GBP/USD, and USD/JPY will rise and other pairs like USD/??? will fall. Well this is what I see happening of late on a daily basis anyway. For some reason or the other: of late EVERYTHING seems to ‘wait on the Dow’ like never before that I’ve seen. I actually threw this open for discussion on my Wilder thread but nobody gave any input. What I was saying is that of late: NOTHING seems to happen until the NYSE opens. I don’t remember it being like this before. You do get the odd bit of ‘action’ just when each of the individual markets open but then everything just seems to ‘loiter’ until the next market opens or the Dow opens for trading. There is then ‘action’ during most of the NYSE session and, after the NYSE closes, we go back to ‘loitering’ again!!! (Today, ODDLY enough, has been an exception to this ‘rule of late’ i.e. even with the NYSE being closed there’s been some nice movements today in the forex markets. I know this because I’m showing nice profits today that were not there yesterday)!!!

Regards,

Dale. (forexbrokersonline.net).

thanks dale i appreciate your feedback and yes I value your opinon coz I know you have an extensive trading background.

Some say bear market witha rally some say bull market begining either way if december is strong for the dow, s&p and the other stock markets then I will keep a close eye on dollar weakness coz as of late i notice the weaker the djia is the stronger the dollar seems and so I will watch things like growing djia and growing oil to weaken dollar gains???

This btw is why i am a technical guy coz there isnt alot of guessing in technical work everything seems clearer to me through technical analysis but i like when my analysis lines up with fundamentals for what may seem like an exceptionally strong signal for me :slight_smile:

Hello again,

While reading your reply above something else I’ve noticed that has ‘not always been so’:

Of late:

Gold and Oil also move WITH (in the same direction) as the Dow. This was definitely ‘never so’ before either.

Regards,

Dale. (forebrokersonline.net).

Dale i just had a thought :slight_smile:

with the4 fed esentialy printing money to combat deflation won’t that also contribute to dollar weakness? That combined with the December effect hmmmmmmm??? very interesting

i must be careful not to allow any fundamental perspective affect my technical analysis but if they are in agreeance for near term dollar weakness and even mid term dollar weakness then Ill play it for all I can :slight_smile:

Hello again,

I have a problem with fundamental analysis. The problem is that I ALWAYS ‘get it wrong’ and quite frankly: I don’t have a clue when it comes to fundamentals!!! So: I just folow my Wilder ‘stuff’ (when I’m ‘behaving myself’ that is) and that’s the best I’m going to be able to do for myself I reckon.

Now according to my Wilder ‘stuff’: the USD IS getting ready for what (I HOPE to be) a SPECTACULAR drop (or advance in the case of USD/JPY of course).

I’ve attached some charts for you to look at (I’m sure you have already seen this on your own of course. It’s just that my ADX Oscillator really seems to ‘put things into perspective’ for me).

Take a look at the ADX Oscillator (the first ‘indicator’ on each chart). (Oh: and it’s just Wilder’s ADX or ‘Average Directional Index’ CODED CORRECTLY and presented in an oscillator form). It’s really easy to see the strong correlations between these charts and when you get a ‘downturn’ or ‘upturn’ in the oscillator this is a sign of an impending trend reversal and I honestly feel that given the ENDLESS trends that have prevailed for the past few months, coupled with the fact that all the instruments in the attached charts appear to have hit strong support or resistance levels, we’re going to see the trend reversals soon and this, coupled with an ‘anticipated’ rally in the Dow, only serves to affirm my belief. And it does not matter WHICH USD/??? chart I look at: the oscillator is almost identical on every one of them.

Then again: I’ve been KNOWN TO BE WRONG!!! LOL!!!

The ‘long and short of it’: TECHNICAL ANALYSIS RULES in my opinion!!!

Now funnily enough: I’ve read one or two LESS than complimentary posts about technical analysis. One of them REALLY made me laugh because it said technical analysis was ‘BS’ and the only reason it works is because so many people rely on it and make trading decisions based on it. Well??? WHO CARES if that’s the reaons it works JUST AS LONG AS IT WORKS RIGHT!!!

Regards,

Dale. (forexbrokersonline.net).

dowcorrelations.zip (309 KB)